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Fact Sheet
#63: The Failure of Iran
Sanctions
(February 1, 2010)
The entire world seems to
agree that Iran should
not be allowed to develop nuclear weapons.
The principal tactics that have been adopted
to prevent Iran from creating a bomb
are economic and political sanctions imposed
by individual countries and internationally,
as a result of the the UN’s adoption
of Security
Council Resolution 1737. Despite the
failure of three rounds of sanctions, Obama
Administration officials said in January
2010 they intend to press for a new round
of sanctions even as Russia and China continue
to balk at the idea.
In December
2008, Iranian Foreign
Ministry spokesman Hassan Qashqavi reiterated
that
“Iran will never suspend uranium enrichment.” Analysts
now predict the Iranians could
produce a bomb in anywhere from six months
to five years. “We haven't really moved
one inch toward addressing the issues,” Mohamed
ElBaradei, director-general of the International
Atomic Energy Agency told the Los
Angeles Times. “I think so far
the policy has been a failure.” He
goes on to suggest the sanctions may have
actually been counterproductive. “Many
Iranians who even dislike the regime,” ElBaradei
observed “[are]
gathering around the regime because they
feel that country is under siege.”
Reports suggest
Iran’s economy
is in a fragile state, but this is due more
to declining oil prices than to the impact
of sanctions. The fact that many UN member
nations that supported Resolution
1737 in 2006 continue to trade with Iran
has minimized the impact of sanctions and
proved to Iranian leaders that UN resolutions
and international threats need
not be taken seriously. Moreover, Gulf Arab
nations that fear a nuclear Iran have lost
faith in the West’s willingness to
stop the Iranians and have also begun to
negotiate deals with Tehran.
Here are just a few examples
of how the effort to isolate Iran has
been undercut:
-
On September 6, 2009, Venezuelan President
Hugo Chavez sealed an agreement to export
20,000 barrels per day of gasoline to
Iran.
-
On September 11, 2009, Russian Foreign
Minister Sergei Lavrov made clear that
Moscow would not be involved in any new
rounds of sanctions against Iran in the
UN Security Council and dismissed a U.S.
timetable for securing progress from
Iran on ending its nuclear-fuel program.
-
On November 27, 2008, German and
Iranian business leaders began a conference
in Hamburg called “Iran Sanctions:
Practical Consequence for German Firms.” The
purpose of the conference was to improve
German business relations in Iran as
well as the German and Iranian political
relationship.
-
In August, 2008, a German corporation signed a $150 million
deal with Iran to build natural gas liquification
plants in the country. The German Economics
Ministry maintains that the trading of
natural gas to Iran does not violate Security
Council Resolution 1737.
German engineering firm Aerzen secured a 21 million euro contract to supply a steel factory in Esfaham, Iran.
-
German Chancellor Angela Merkel's administration subsidizes investments in Iran by providing German firms with 250 million euros in credit guarantees.
-
Germany's Federal Statistical
Office released data showing exports
to Iran increased 10 percent over the
first three quarters of 2008. Germany's
exports to Iran are expected to total
4 million euros this year, close to the
record it set in 2004 and 2005. During
the first seven months of 2008, the German
government approved 1,926 transactions
with Iran, a 63 percent increase over
last year. This has further cemented
Germany's position as Iran's largest
trade partner.
-
In April 2007, Austrian oil company OMV signed a 22 billion euro agreement to produce liquefied natural gas from Iran's South Pars gas field.
- Austria's third-largest bank, Raiffeisen Zentralbank, remains active in Iran and has absorbed the transactions of other major European banks that shut down their operations in Iran.
- In January 2008, Iran
and Italy’s electric
company, Edison International, signed
an oil exploration deal for $107 million.
-
China has
also increased its volume of trade with Iran.
Between 2000 and 2005, the amount of
Chinese imports into Iran increased by
360%. Iran’s Deputy Minister
of Commerce, Mehdi Ghazanfari, predicts
that exchanges between Iran and China
for the year 2008 will total $25 billion.
China also negotiated a $16 billion deal
to develop Iran’s northern Pars
gas field.
-
Russia's trade
relationship with Iran directly
ignores the Security Council Resolution.
In August 2008, the Russian oil corporation,
Gazprom, signed a multi-billion dollar
deal to help Iran cultivate its oil and
gas fields. French and Japanese oil companies
were candidates at one point, but dropped
out of dealings with Iran because of
international pressure. Russia has
also been building a nuclear plant
in Iran, which is now expected to begin
operating in 2009.
-
Swiss energy
giant EGL signed a 25-year
deal with the National Iranian Gas Export
Company to buy 5.5 billion
cubic meters of Iranian natural gas per
year, starting in 2011, for approximately
$20 billion.
-
Turkey has
maintained trade ties with Iran.
In 2005, bilateral trade between
Iran and Turkey equaled $4 billion,
a figure expected to grow to $10 billion
in 2008. Iran and Turkey have agreed
to continue their relationship and hope
to increase their bilateral trade revenue
to $20 billion per year.
-
On December 2, 2008, Malaysia signed
a $14 billion deal with Iran for the
construction of two natural gas liquification
plants as well as two gas fields. The
two countries signed
a multi-billion dollar gas deal
in 2007.
-
The Persian Gulf
Cooperation Council decided
to consider a Free Trade Agreement with
Iran. The agreement will lead to economic
benefits for the
UAE, Saudi
Arabia, Qatar and Kuwait.
-
Oman and Bahrain have
been negotiating with Iran to buy natural
gas.
-
Iran is the United
Arab Emirates’ largest
non-oil trading partner.
-
Iran retains strong
relations with Pakistan and
is working on a “peace pipe” that
would transfer natural gas between Iran, Pakistan and India.
Even the United States has engaged in
trade with Iran. According to the Department
of Agriculture, Iran has bought more than
one million tons of wheat from the United
States since the beginning of the 2008-9
crop season. -
Iranian
students study abroad in Germany, France, Canada, Australia and
the United
Kingdom. The Association of American
Universities is seeking to pave the way
for a bilateral education program with
Iran.
University presidents from Carnegie
Mellon, Rice, Maryland and Cornell,
Florida and UC Davis visited Tehran
in November 2008 with the blessing
of the U.S. State Department to discuss
student exchange programs.
-
Between January and July 2009, trade between the 27 European Union countries and Iran amounted to some €10 billion (about $14 billion).
-
As of January 2010, there were around 1,000 Italian companies active in Iran, including Fiat, Ansaldo, Eni, Danieli, Duferco, and Maire Tecnimont, which signed a €200 million (~$287 million) gas deal with Iran. Other Italian companies, such as Carlo Gavazzi Space, have even equipped the regime's military and contributed to Iran's satellite program.
-
In January 2010, a top Russian arms trade official said Russia still considers Iran a valuable customer for its weapons and that no international agreements bar Russia from selling weapons from Tehran.
All of the aforementioned nations maintain
that they are not violating Security
Council Resolution 1737. Trading with Iran
and importing goods from the country cannot,
the countries claim, contribute to Iran's threat
of creating a nuclear bomb. Any investment
in Iran, however, bolsters its economy and
provides revenues that can directly or indirectly
(by freeing up other resources) be used for
nuclear weapons development.
Iran might not be discouraged from its goal
of producing nuclear weapons by total compliance
of all nations with existing sanctions, or
even stricter sanctions, but it is evident
that the present weak, unenforceable and
widely ignored policy has not had the desired
effect.
Sources: The
U.S. State Department; Wikipedia; Reuters; Fars
News Agency; European
Jewish Congress; NewsBriefsOman;
AFP,
(August 25, 2008); Los
Angeles Times, (December
6, 2008); Reuters, (December
9, 2008); The Wall Street Journal (February
6, 2009), (September
11, 2009), (January 14, 2010); Gulf
in the Media; Jerusalem Post (June
11, 2009), (January 28, 2010); The Associated Press (September
8, 2009); Financial Times, (September
23 2009); Ynet (January 28, 2010)
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